A just-in-time system is comprised of a number of manufacturing tech­niques whose central goal is to produce only to specific customer orders, and in the shortest possible period of time. The next techniques are some of the ones used to reach this goal.

• Frequent supplier deliveries directly to production
• Reliance on fewer suppliers
• Material movements initiated by a kanban authorization from the downstream workstation
• Constant reduction of lot sizes, lead times, and equipment setup times
• Minimization of machine setup times

These manufacturing techniques are sometimes coupled with payments to suppliers that are based solely on the content of their components in fin­ished goods produced by the company rather than by supplier invoices.

Given the small number of in-process controls required by a JIT system, no controls flowchart is provided. All of the next controls should be consid­ered primary ones necessary to the ongoing functioning of a JIT system.

• Certify the quality and delivery reliability of suppliers. A common JIT technique is to allow suppliers to deliver directly to the production fa­cility without any receiving function, so a critical control is to precer­tify the quality and delivery reliability of suppliers.
• Create a supplier performance scoring system. The preceding control is designed to measure the initial capability of a supplier to deliver high-quality goods in a reliable manner. However, there must also be a mechanism for ensuring that suppliers’ ongoing performance remains at a high level. Thus, using a supplier performance scoring system that is based primarily on quality and delivery criteria is a necessary control.
• Use standard containers to move, store, and count inventory. A control problem in a JIT environment is the lack of any system for counting in­ventory once it is in the production process. One solution is to shut down the inflow of raw materials into the production process and let all work in process be completed before conducting a count. Another ap­proach is to use standard containers to move, store, and count inventory. Using these containers makes it extremely easy to determine quantities on hand.
• Inspect parts at downstream workstations. Because JIT systems pro­duce exactly enough goods to meet immediate customer needs, it can be devastating if parts are incorrectly made and this is not discovered until the end of the production process. Thus, a major control point is to require each workstation to inspect the work-in-process inventory provided to it by the immediately preceding workstation. This imme­diately highlights production problems and initiates the timely creation of replacement parts.
• Do not work without an open kanban. A kanban is an authorization to create a specific quantity of inventory. Once the specified amount is completed, the kanban is closed, and no further production work is au­thorized. If a workstation were to continue to create inventory without an open kanban, the potential exists for the creation of too much in­ventory, which may never be used. Thus, absolute enforcement of the kanban authorization rule is necessary to ensure that inventory levels are kept to a minimum.

[tags]accounting control, just in time system[/tags]

Tags: accounting control, just in time system